EUR/USD analysis: EU soft data limits EUR progress

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1579

German ZEW survey showed that EU business sentiment plunged in October.
Euro area September inflation and US housing data to take center stage this Wednesday.

The EUR/USD pair peaked at a fresh weekly high of 1.1620 this Tuesday, but once again, was unable to hold on to gains above the 1.1600 figure, settling a few pips below the level at the end of the US session. The dollar remained weak amid a better market mood, which resulted in most major indexes ending the day in positive ground. As for data, the German ZEW survey for October showed that business sentiment deteriorated more than anticipated, as the index plunged to -24.7 for the country vs. the previous -10.6 and the expected -11.3, while for the EU, it fell to -19.4, down from -7.2 in the previous month and well below the expected -9.1. The Union also released its trade balance figures for August, with the seasonally adjusted surplus up to €16.6B, an increase compared with July €12.6B. US data, on the other hand, was overall perceived as encouraging, as the number of job openings reached a series high of 7.1 million on the last business day of August, according to the US Bureau of Labor Statistics, while the NAHB Housing Market Index surged to 68 in October, beating expectations.

Wednesday will bring EU final September CPI, seen up 2.1% YoY, matching the previous estimate. The annual core reading, however, has been forecasted at 1.0% vs. the previous 0.9%. The US will release Housing Starts and Building Permits from September. More relevant, the FOMC Minutes will be out later in the US afternoon, and market players will be hoping for fresh clues about future movements in rates.

The pair has made little progress and remained contained by the top of the range and a strong static resistance area at 1.1620, also the 50% retracement of the latest daily decline. Furthermore, the daily chart shows that the 100 DMA stands flat around the level. In the 4 hours chart, a bullish 20 SMA converges with a bearish 100 SMA a couple of pips below the current level, and around the 38.2% retracement of the same decline, reflecting the absence of directional strength. The Momentum indicator advances around its mid-line, while the RSI indicator continues consolidating around 58, leaning the risk to the upside, despite the lack of directional momentum.

Support levels: 1.1575 1.1530 1.1500

Resistance levels: 1.1620 1.1660 1.1700

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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